It is important to note that content can belong to several vocabularies at once. Also vocabulary relations can be modified dynamically as new content or new vocabularies are added. This saves the trouble to manually update the relationships each time.
The taxonomy module in Drupal allows multiple lists of categories for classification. It offers the possibility of creating thesauri (terms with horizontal relationships) and taxonomies (terms with hierarchical relationships). Basically, the taxonomy deals with a hierarchy of information and the thesaurus deals with relationships between terms. Taxonomy is what affects how exactly the content is organized.
Settings for the taxonomy module can be found in the Drupal admin area -> Structure -> Taxonomy.
You can add a new vocabulary using the “Add vocabulary” link.
The Name field is mandatory and if you want you can add a description.